Since the early 1800s, coal drove our country’s economy and built our industrial foundation. Enter natural gas...
Since the early 1800s, coal drove our country’s economy and built our industrial foundation.
Enter natural gas.
Since the late 1800s, natural gas has been tapped as a source for energy as an alternative to the less clean and cumbersome coal market. The recent natural gas boom in Northeast Pennsylvania is a talisman to such industry switch.
The title industry has also evolved with these changes. For many years, title underwriters have addressed mineral estates in land through endorsements. In Pennsylvania the Pa. 1030 endorsement (ALTA 9-06 as revised) represented the coverage given to a lender to address coal companies and their rights to and over the surface of land. There was a catch to this however. Nowhere in the endorsement were gas rights mentioned. It seemed this lack of reference had its roots in Pennsylvania case law because for over a century and a half, litigants pushed for the proposition that gas was a mineral, while their opponents theorized it was not.
Why is this important? In almost all deeds in Pennsylvania where there are coal veins and deposits, reservations of coal and other minerals were inserted into the deeds of conveyance, thus retaining ownership rights in the grantor. The issue of natural gas being a “mineral” was before Pennsylvania courts in several appellate jurisdictions and the Supreme Court.
To address this quagmire, the title industry reacted by changing their 1030 endorsement to add the following language: “…damage to the improvement resulting from the right to use the surface of the Land for the extraction or development of minerals or any subsurface substances.” (emphasis added) This language, of course, was intended to include natural gas.
Going forward, title underwriters continue to adapt their underwriting policies to offer the maximum coverage to the insured—in this case by including natural gas in their endorsement clause, thus keeping up with the ever-changing industry standards. Don’t forget to ask your title insurance agent if the 1030 endorsement would be applicable to your transaction.
Frank D. Mroczka
(Frank is Senior Counsel at United One Resources and can be reached by email at firstname.lastname@example.org
.)Published on Wednesday, September 03, 2014